Pulling Back The VIP Curtain

The VIP department is one segment of sportsbook marketing that has largely escaped notice, but the recent dustup between DraftKings and Fanatics might put it in the spotlight.

The news of the week (Super Bowl LVIII notwithstanding) was the lawsuit filed by DraftKings against its former Head of VIP, Michael Hermalyn, after the latter took a job with rival Fanatics.

Hermalyn is accused of violating his non-compete, including the theft of confidential information relating to DraftKings VIP lists and practices. And that is the part of the story I want to focus on today.

---

Sponsor’s Message: BroThrow.com is building the most player-friendly company in sports gaming.

Our subscription-based, no-juice sports betting platform provides the fairest, simplest way to bet on sports with your friends.

Check out our tech: https://brothrow.com/

---

Reining in sports betting marketing is a hot topic in responsible gambling circles. Cutting down on ads. Ensuring ads aren’t targeting underage or vulnerable populations. Changing the terminology used in advertisements. These efforts are all well and good, but they miss a glaringly obvious opening that no one seems to want to close: The VIP customer.

As responsible gambling consultant Jamie Salsburg tweeted in May 2023, “The current wave of sports betting regulatory response is WILD! But just wait until someone introduces them to the use of VIP schemes.”

“I’ve been surprised at how little talk there has been of VIP treatment here in the USA, but I think this high-profile tug-of-war could bring it to the forefront,” Salsburg told Straight to the Point.

(Jamie has been banging the VIP drum for several years).

The Online VIP Customer

When we think of casino VIPs, we tend to think of the ultra-rich who jet-set to Las Vegas (or Macau) to gamble ungodly sums while the property caters to their every whim.

Online VIPs are different.

Data is hard to come by, but New Jersey is one locale that does pull back the curtain a bit. In its annual reports that look at every bet placed at licensed New Jersey online gambling sites, Rutgers University found the following:

“Top 10% players gambled more money on more bets across more days on more sites than all other casino gamblers, but the amounts of any one bet were generally smaller than those of the average player.

“As in 2018, the mean ($15.07) and median ($2.83) single bets of other casino bettors were higher than those of the Top 10% (mean=$9.39; median=$2.27).”

So, it’s not the size of the bet that makes them the Top 10% of players; it’s the frequency of their betting.

Per Rutgers:

“… members of the Top 10% bet on 12 times as many days – 201 versus 16 days on average… Top 10% gamblers also placed 51 times more bets (166,070) in 2019, on average, than other casino gamblers, who placed an average of just 3,232 bets.”

The result is the Top 10% wager, on average, 33 times more ($711,287) than the other 90% ($21,496). Those numbers are even more stark when you look at the median, $258,844 vs. $750, indicating a few whales may be skewing the average of the other 90% of bettors.

Going outside New Jersey, The Guardian reported on the UK Gambling Commission’s findings in 2020 that betting firms are heavily reliant on VIP customers, with 83% of deposits coming from 2% of one firm’s customers.

The VIP Department

Circling back to the VIP departments, which are responsible for outreach and offering the right inducements to keep VIP players happy and in action, we start to see the obvious friction between the VIP department and the Compliance-RG department.